Majors range quietly this Monday despite political news came from different fronts over the weekend. As the US Senate failed to approve the House bill on funding, the US government officially shut down on Saturday, resulting in a weaker dollar across the board at the opening, although the FX reaction was quite shallow.
Better-than-expected European data were not enough to prevent the common currency from extending its latest decline, now trading at fresh 2-week lows against the American dollar, around 1.1930.
The greenback is down across the board this Monday, quickly reverting the positive momentum it got at the weekly opening. The EUR/USD pair gapped marginally lower and fell down to 1.1737 but quickly changed course, now trading at its highest for the day not far from the 1.1800 threshold.
The dollar failed to hold onto its earlier gains on Friday as investors concentrated more on the lower-than-expected wage growth than the better-than-expected employment gains.
It was a harsh start to the week for the common currency, as on Sunday talks of a coalition government in Germany collapsed after the Free Democratic Party pulled out. Merkel's CDU is now either condemned to a minority government, as a different coalition is pretty unlikely or call for a snap election. The EUR/USD pair fell to 1.1722 at the beginning of the Asian session but has trimmed most of its early losses early Europe, as current government woes will hardly affect German's economy.
The dollar found its pace this Tuesday and the EUR/USD pair trades at a fresh 4-month low. The greenback began recovering during early Asia, accelerating its advance after London's opening. In the macroeconomic front, German's Industrial Production data came in below expected, down in September 1.6% from previous month, and up by 3.6% from a year earlier, below market's expectations of 4.4%. Draghi delivered the opening remarks at the ECB Forum on Banking Supervision, referring just partially to monetary policy, as he said that there is little evidence that negative rates undermine bank profitability. The EU is about to release its September Retail Sales, while the US has nothing today on the agenda, but an economic optimism index. By the end of the day, Janet Yellen is due to speak, although there are little chances she will refer to monetary policy-
The week starts with the greenback giving up some ground against its major rivals, extending the downward corrective movement that begun on Friday ahead of Wall Street's close. The EUR/USD pair trades near its daily high, around 1.1640, still below the key 1.1660 former support, now resistance.
ECB set to announce its monetary policy decision, rates on hold, trim QE. Draghi will try to cold down market's expectations, to keep EUR's rally in check.
Japan's PM victory in snap election underpinning the USD Scarce calendar to kick start the week, focus on Tuesday's PMIs
Spain's political situation weighs on the common currency Dollar broadly weaker on strong Asian data
The EUR/USD pair started the week with a soft tone amid political jitters affecting the common currency. Over the weekend, the German Social Democrat party beat Angela's Merkel ruling one in Lower Saxony, by winning 35% of the vote. Another factor affecting the common currency today is the looming Catalonia's Puigdemont independence decision, as further chafe with Spain PM Rajoy, could harm confidence in the Union.
The EUR/USD pair trades barely changed daily basis around 1.1830, but no doubts the common currency is the weakest currency through the FX board today, as despite greenback's soft tone, the pair is under selling pressure. Undermining the common currency, were headlines indicating that ECB's officials are considering reducing QE to €30billion from current €60 billion per month, starting next January. Also, Estonian ECB's Governing Council member Ardo Hansson, said that monetary policy has to remain accommodative.
The week starts in slow motion, with a holiday in Japan keeping majors within limited ranges, and the EUR/USD pair confined to a tight range around the 1.1730 level. Despite headlines on Friday suggesting a possible missile test from North Korea, no big news came during the weekend. Still risk-averse sentiment dominated the Asian session, with safe-haven gold being the most notorious mover.
The Pound retains the sour tone at the beginning of the week, plunging against the greenback to 1.3300, its lowest since September 14th. UK's Finance minister Hammond was on the wires early London, stating that the sooner the government resolves the Brexit, the sooner the economy would pick up, as uncertainty around the issue today, is weighing on business. The UK's Markit manufacturing PMI for September came in at 55.9 from previous 56.9, indicating anyway that the economy kept expanding at a solid pace at the end of the third quarter.
The EUR/USD pair holds near its daily low of 1.1895, set early Asia, as the pair gapped lower on German's election outcome. Angela Merkel won a fourth term, but her victory was sour, as she now needs to form a coalition government, whilst the far-right got into the Parliament for the first time since WWII, after scoring 12.6% of the votes. Merkel's party got 33% of the vote, down over 8 percentage points from the 2013 election. Adding fuel to the fire, the German IFO survey for September just released came in below market's expectations.
The EUR/USD pair surged to flirt with the 1.2000 level early Europe, as the common currency got a boost from upward surprises coming from the EU preliminary PMIs for September. According to Markit, economic growth regained momentum at the end of the third quarter, as for the whole region, the Composite PMI is up in the month at 56.7 from previous 55.7, the highest since May this year, when the index reached a six-year low. Manufacturing and Services activity, surged to the highest in over 75 months. ECB's President is scheduled to speak in a while, but he will probably avoid talking monetary policy, and if he comments something, will be an attempt to down talk the EUR. Later today, US PMI will grab market's attention.
With no negative headlines during the weekend, Monday started with weakening safe havens, higher equities in Asia and Europe, and the greenback taking some advantage against the EUR and the GBP. Anyway, dollar's advance is barely corrective against the Pound, while the EUR/USD pair is consolidating within Friday's range. The day will be light from the data front, with market's attention centered on Wednesday Fed monetary policy meeting, the event of the week.
Relief was the name of the game at the weekly opening, as North Korean refrained from performing a missile test, while despite the destructive power of Hurricane Irma still desolating Florida, seems the damages won't be as terrible as feared last week. The American dollar gapped higher, particularly against safe haven assets, resulting in the EUR/USD pair also opening lower, and hitting a daily low of 1.1992. An extremely quiet macroeconomic calendar is keeping majors within tight intraday ranges, but the common currency managed to recover the 1.2000 mark and heads into the US session aiming to erase its weekly opening losses.
The EUR/USD pair eased below the 1.1900 level overnight, but didn't go far away with speculative interest cautiously waiting for the US monthly employment report, despite multiple macroeconomic releases ever since the day started. Particularly focused on economic growth, the final August manufacturing PMIs in Asia and Europe came in-line, or above expected, with the exception of German's one, that suffered a minor downward revision to 59.3 from 59.4, still near a six-year high. For the EU, manufacturing growth remains among the strongest since 2011, according to Markit, unrevised at 57.4.
The first batch of UK data is out, and the GBP/USD pair barely reacted to the news, holding around the 1.2975 level and after having fell down to 1.2951 a fresh weekly low. UK's Industrial Production rose by more than expected in June, up by 0.5% MoM and 0.3% YoY, but manufacturing lagged, flat on the month and up by 0.6% when compared to a year earlier, these lasts, matching market's expectations. A separated report showed that the trade deficit widened in June, by £2.0 billion 2017 to £4.6 billion.